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Corporate Watch

 

Business as usual under New Labour?

It looks as if the election of a Labour government on 1 May 1997 has not threatened the future development of private prisons in the UK. In fact, the government will encourage the use of private capital for public sector projects using the Private Finance Initiative (PFI).

Geoffrey Robinson, the government’s paymaster general has said that the PFI is  the only way that new projects in any part of the public sector will be funded. He regards the finance, design, build and manage model as most efficient - even for prisons - as split responsibility adds to complications and a division of accountability.

Meanwhile, Jack Straw, the new home secretary, has confirmed that all existing prison contracts - whether to   privately manage or to finance, design, build and run - will be honoured. But within a week of coming to power his pre-election claim that “we shall certainly make no new ones [contracts] and, within the existing budget, shall take back into the public service privatised prisons as soon as contractually possible” has changed. Speaking on BBC radio on 8 May he said: “...if there are contracts in the pipeline and the only way of getting the [new prison] accommodation in place very quickly is by signing those contracts, then I will sign those contracts.”

What constitutes “in the pipeline” is a moot point.  The Prison Service has applied for planning permission for three new prisons to be built and is investigating sites for two others. If  what the paymaster general says is true, then at the very least, all of these will be privately financed, designed and built. But before the tendering process for  these projects begins there is plenty of time for a public debate about whether the new prisons have to be  privately managed as well.

At this stage, whether Mr Straw intends to initiate such a debate and stand by his original pledges remains unclear. According to a Prison Service spokesperson, “the home secretary will expand on what he said when he feels it appropriate and is ready to do so.”

 

Privatisation under way in South Africa  

The South African government is privatising seven new prisons. The Departments of Public Works and Correctional Services will jointly issue Requests for Qualification  from interested companies in May and June 1997. Requests for Proposals will be made available to short listed respondents towards the end of the summer but the exact timetable for inviting and considering bids and awarding contracts has not yet been agreed.

The new facilities  include pre-trial, super-maximum and maximum security prisons and at least one youth development centre. They will hold a total of 10,000 prisoners.  The  value of the contracts is more than R1.5bn (£208m).  Contractors will be expected to  finance, design, build, maintain and operate the facilities. Their financial returns are being guaranteed by the government.

All of the leading international prison companies are expected to bid in conjunction with South African partners. According to the Department of Public Works, no companies have made any presentations to ministers or officials yet although “considerable interest has been shown in the programme both locally and abroad.”

Despite recent statements made by the corrections minister about locating prisons in disused mines, none of the new facilities will be underground.

The seven prisons  are part of the government’s Asset Procurement and Operating Partnerships programme which was approved in November 1996.

 

 UNITED KINGDOM

Cleaning up?

    Wackenhut has been negotiating with the Prison Service to take over the industrial functions of HM Prison Coldingley in Surrey on a profit sharing basis. Coldingley is a training prison with an industrial bias and provides prisoners with work in sign making, engineering and laundries. A contract drawn up before the general election is awaiting consideration by ministers.  Coldingley’s industries generate revenues of around £1.8m, which represents some five per cent of the earnings of all prisons. The workshops make all the signs used by the Prison Service. Its laundry has recently won a number of lucrative contracts to provide services to National Health Service hospitals. Its ability to compete with both public sector  staff and private companies for such work is partly based upon its lower wage costs.

 

Coldingley’s governor believes that more commercial marketing expertise and new capital are needed in order for the prison’s industries to expand and compete. But public money is unavailable. Wackenhut would bring marketing skills and capital investment but only if it could take on existing Prison Service staff.  Trade unions are objecting to the transfer of some 40 staff.

n Public/private partnership contracts for three farming and four industrial projects at other prisons are also waiting to be considered by the new Labour administration. Private firms would inject capital and management expertise in return for a share of profits. In these cases, no staff transfers would be required.

n The Private Finance Initiative (PFI) - Dangers, Realities, Alternatives is a new booklet which examines the use of the PFI. Drawing on European examples, it suggests an alternative approach to public sector finances. Available from: PSPRU, Unison, 1 Mabledon Place, London, WC1H 9AJ, England. Price:£10 (public sector), £50 (private sector).

 

Lean staffing at Wolds

    Wolds is run by Group 4 and was the first prison in England to be privately managed. It opened in 1992 as a remand centre for 320 prisoners.  In 1995 it became a local and training prison for 335 and in July 1996 the capacity was increased again, to 360. Group 4's contract has been renewed for a further five years commencing April 1997.

In April, the prison’s Board of Visitors published its annual report for the year to 31 December 1996. Education was described as “a major positive factor” and staff continued to “maintain high standards”. There had been less adjudications and  complaints than in 1995.

But the Board also had a number of concerns. “The increasing population of the prison has brought more assaults on staff and prisoners” with prisoners having to double up in  single cells.

The shortage of work for prisoners “continues to be a problem” with “few realistic opportunities for significant expansion. It is unlikely that more than a quarter of the prisoners could be employed for a significant part of their time and, within the accommodation available, it is not possible to provide suitable education courses for the other threequarters.”

The Board was also worried about the pressures on “an already lean staff” to cover all duties, both inside and outside the prison, undertake training and cover for sickness and leave. Despite assurances from the prison’s director, the Board were disappointed at “the company’s proposals to downgrade the number of supervisors by more than 50 per cent and not to provide additional custody officers at a time when prisoner numbers may increase by up to 35 per cent of the original capacity.”

The Board of Visitors HMP Wolds, Annual Report to the Secretary of State for the Home Department, year ending 31 December 1996. Available from: Mr F Henry, HMP Wolds, Everthorpe, North Humberside, HU15 2JZ England.

 

Private overcrowding

    One of the originally stated aims of privatising prisons was to ease overcrowding in Britain’s prison system. But as  the prison population for England and Wales passes a record 60,000, three of the four privately managed prisons are being overcrowded to help cope with the increase in numbers. Prison Service figures for March 1997 reveal that Doncaster held 1,017 prisoners compared with its operational capacity of 771 (132 per cent); Blakenhurst was operating at 115 per cent of capacity; and  Wolds at 111 per cent.

 

 

AUSTRALIA

Siege at women’s prison

    Eight prisoners armed with planks of wood threatened to riot during a siege at the CCA-run Metropolitan Women’s Prison in Melbourne, Victoria on 28 April 1997. The siege followed an incident in which another prisoner was handcuffed for allegedly trying to assault a member of staff. The state’s Special Emergency Services Group was called in to help negotiate a peaceful end to the confrontation. The company is holding an investigation into the siege and the prisoners’ concerns which caused it.

 

ACT deliberates

    The Australian Capital Territory’s deliberations on setting up its own prison to avoid sending prisoners to New South Wales continues. A recently issued discussion document, Establishment of a Correctional Facility assesses the pros and cons of privatisation. While it states that “those who visit private facilities are likely to be impressed by their smooth and professional operation ... more research is required to make meaningful comparisons between private and public sector institutions using objective performance measures.”  

    The report adds that “unfortunately, such research is sometimes hampered by restrictions arising from commercial in confidence... and that ... available evidence does not support the conclusion that the private sector provides correctional services at a significantly lower cost to the government than a reformed public sector.”

    ACT’s attorney general has said that the decision about public or private involvement in any future facility should not be based on ideology or an unquestioning adherence to past practice.

 

Inquest into death at Mt. Gambier

    A coroner’s inquiry into the December 1995 death of prisoner Joe Susic at Group 4-run Mt Gambier prison in South Australia opened in April. Mr Susic died of a heroin overdose. The early stages of the inquiry were concerned with how the prisoner had access to the drug.

 

Conference controversy

     The Australian Institute of Criminology  (AIC) is holding a conference on prison privatisation in Melbourne in June. Billed as a correctional case study to explore the public policy implications of the move towards privatisation,  the event has received what the AIC refers to as “the generous support” of Corrections Corporation of Australia and Group 4 Correction Services,  both of which run prisons in Australia.

    But Justice Action, a Sydney-based organisation, has criticised the AIC on the grounds that the “majority of participants represent either the private interests or the public agencies and institutions which engage their services.”  It wants the AIC to dismiss the corporate sponsorship and to arrange a more balanced programme.

    AIC conference details:Conference Co-ordinators, PO Box 139, Calwell, ACT2905, Australia.

Fax: ++62929002. Email: conference@netinfo.com.au

n The conference of the Australian and New Zealand Society of Criminology in July 1997 will discuss the privatisation and corporatisation of corrections. Details:KathleenDaly,Fax:++738755608.Email: k.daly@hum.gu.edu.au

 

QCORR’s new Board

    The Queensland Corrections Board, which is overseeing the transition of Queensland Corrections to a government-owned corporation, will be headed by Mr Jim Kennedy. He is a director of  Commonwealth Bank, Quantas, MIM Holdings, Queensland Investment Corporation and Pacific Dunlop.  In a 1988 review of Queensland’s correction system, Mr Kennedy recommended that the state’s prisons should be privately run. Other board members are: a financial analyst; a lawyer; a businesswoman; a managing partner of accountants/consultants KPMG; a Queensland Treasury assistant and a trade union official. 

 

 

UNITED STATES

CCA marketing abroad

    According to the company’s latest 10K report filed with the Securities & Exchange Commission, in 1996 Corrections Corporation of America’s international marketing was  carried out primarily through its alliance with Sodexho. CCA  promoted its management services in Germany,  Hungary,  Panama, Mexico, Canada and Australia.

 

More kids on the block

    Private facilities have played a significant role in  American juvenile corrections for over 20 years. This role is increasing. The juvenile population in private facilities in the US increased by 9.6 per cent from 1991 to 1995, according to a  study published in April 1997  by the Office of Juvenile Justice and Delinquency Prevention (OJDP).  As at 15 February 1995, 35,636 youths were in custody, the majority of whom were under 15 years of age. Fewer than two per cent were under 10 years old,  36 per cent were 16 to 17 and four per cent were 18 and older.    The number of white youths increased 2.6 per cent while the number of  black and Hispanic youths  increased by 15 per cent and 31 per cent respectively.

 

More adults too

    The 1996 census of private adult correctional facilities has recently been published by the University of Florida’s Private Corrections Project. According to the census:

n There were 132 private adult correctional facilities in operation or under development in the US, UK and Australia at the end of 1996 compared with 104 in 1995. As in 1995, 89 per cent were in the US, and the remainder in the UK and Australia.  

n The rated capacity of private prisons in the US increased from 57,609 in 1995 to 77,584 in 1996, an increase of 35 per cent.

n Texas had the largest number of private prisons in the US with a potential capacity of 24,467 prisoners. Florida had 6,215 and Tennessee 5,116.

n Seventy six per cent of private prisoners were in   facilities run by firms under contract to  state authorities.

n As before, CCA and Wackenhut Corrections Corp. dominated with 52 per cent and 25 per cent of all US contracts respectively. The third largest was US Corrections Corp. with five per cent.

n Fifteen American prison management companies were operating in the US; two (CCA and Wackenhut) also operated abroad.

n Neither of the UK based firms, Securicor and Group 4, had contracts in the US.

n Mergers and acquisitions  characterised the US industry.

n A new company, Maranatha Production Co. won a contract in California.

n Many of the companies operating adult prisons also run facilities for juveniles. But some of the largest private corrections companies in the US concentrate on juvenile corrections only, eg Youth Services International and Children’s Comprehensive Services.

 

UNITED NATIONS

 

On the 1998 agenda

    In 1993, the United Nations Sub-commission on Prevention of  Discrimination and Protection of Minorities considered a report which recommended initiating a special study on prison privatisation. The suggested issues  for further consideration were:

n the legality in international human rights law of privatisation of prisons or contracted out management;

n  if such privatisation is permissible, the extent to, and conditions upon, which particular functions can be sub-delegated to private contractors;

n whether a set of UN standards for privatised prisons should be developed;

n what detailed safeguards should be specified in any standards as being minimal and/or advisable;

n what is the most appropriate way of ensuring monitoring by UN human rights bodies.

    The Sub-commission will next discuss privatisation at its 50th session in August 1998.

 

 

CORPORATE WATCH

 

Wackenhut builds on record 1996

    More details about Wackenhut Correction Corp.’s (WCC) record breaking 1996 and its growth in 1997  have been published. The company’s revenues increased by 38.6 per cent to $137.8m in 1996 from $99.4m in 1995. Revenues from US operations were $108.24m ($72.85 in 1995) and $29.53m ($26.57m in 1995) were from international operations. Net profit after tax was $8.26m ($4.4m in 1995).   

    Equity income of its foreign affiliates in the UK and Australia increased to $604,000 in 1996 from a loss of $113,000 in 1995. This largely reflected the activities of Premier Prison Services Ltd, a UK joint venture. The increase in income results from three expansions at HMP Doncaster in November 1995, June 1996 and November 1996 respectively, and income earned from two court escort contracts that were awarded in December 1995 and commenced operations in May 1996.

    In 1996, the six highest paid executives of the company received a total of  $1.23m in salaries and other compensation (excluding share options) compared with $1.04m in 1995.

    Most of its business is still in the US with  customers consisting of federal, state and local government agencies. WCC claims that it still regards the UK and Australia as  its primary potential foreign customers.

    In 1996, various agencies of the state of Texas accounted for 39 per cent  (37 per cent in 1995)  of WCC’s consolidated revenues; Louisiana’s Department of Public Safety and Corrections accounted for nine per cent  (11 per cent in 1995). Abroad, contracts with the New South Wales Department of Corrective Services accounted for ten per cent  of revenues (13 per cent in 1995) while  Queensland’s Corrective Services Commission accounted for 11 per cent (13 per cent in 1995).

    Except for its contracts for the San Diego City Jail  and in the UK and Australia, all of which provide for fixed monthly rates, Wackenhut’s facility management contracts provide income  at an inmate per diem rate based upon actual or guaranteed occupancy levels.

    By 14 March 1997, the company had 35 correctional and detention facilities either under contract or awarded with a total design capacity of 24,708 beds.  Of these, 21 facilities were in operation, 12 were being developed by the company and two by a third party.  Of those in development, seven were scheduled to open during 1997.   Also as at 14 March 1997, WCC  had 4,182 full‑time employees (4,139 at facilities, 43 at the company’s HQ) and 207 part‑time. The Company's correctional officers at Junee Correctional Centre, Arthur Gorrie Correctional Centre, and Fulham Correctional Centre in Australia are members of trade unions. But the company only has a contract with the union for the correctional officers at Junee.